Comparable sales, commonly referred to as comps, are recently sold properties that an appraiser selects and analyzes to support an opinion of value for a subject property. Effective comps share key characteristics with the subject, including location, size, condition, age and property type.
In appraisal practice, comp selection is a critical step in the valuation process. Appraisers make adjustments to account for differences between each comparable and the subject property, with the goal of isolating what the market indicates the subject would sell for under normal conditions. Poorly selected or unsupported comps are among the most common triggers for appraisal disputes and reconsideration of value requests.
For loan originators and valuation companies, understanding how comps are selected, adjusted and reconciled provides important context when reviewing appraisal reports. Agents and sellers who believe a valuation is unsupported should focus their challenge on the relevance and adjustment of the comps used — not the conclusion alone.